Affluent Professionals who live Paycheck to Paycheck

22 Jun 2020

In a recent survey done by Willis Towers Watson, it was discovered that 18% of high earners live from paycheck to paycheck, with no reserve funds for unforeseen expenses. 

You would expect this from low-medium income earners who battle to make ends meet in a tough economy, but not the wealthy. The question is why?

The answer is lifestyle creep“the notion of adjusting your lifestyle in a more expensive direction as your earnings increase”

As we move up the corporate ladder, our salary increases and with it our lifestyle. This newfound disposable income allows us to spend on luxuries we never had before. We can eat out more, get a bigger apartment, get a fancier car, buy designer clothing etc.

This all adds up and before you know it you have nothing left of your salary. Maxing out your paycheck from month to month and racking up debt is just not financially responsible and could have negative consequences in the long term.

“Consumers the world over, look for that retail adrenalin hit, swapping their iPhones for the latest model, filling up their closets and eventually buying bigger houses to fit all their stuff.” - The national.ae

If you find yourself in that 18%, then it’s time to bust out of the cycle and take back control of your finances.

•    Tighten your budget – work out a budget that allows you enough to spend on your creature comforts but also covers all your bills and allocates money for savings. You might want a larger house but then might have to settle for a smaller car to balance out the budget. Don’t leave it at that. Check your budget weekly to ensure you are on track.
•    Get that rainy-day fund accumulating – One of the disadvantages of living paycheck to paycheck means not having money for emergencies e.g. car repairs, medical costs, unemployment etc.
•    The larger your paycheck the larger your retirement savings should be to maintain the same lifestyle – Putting away savings for retirement should be one of the first things that come out of your salary every month.
•    Make sure your bills, savings and accounts are on direct debit the day after you get paid, so you know what you have left to spend. – www.fool.com

Just a few adjustments and you will be back on track to building wealth. Chat to your deVere Acuma adviser or our Global Client services team about ways to save money. [email protected] 

Please note, the above is for education purposes only and does not constitute advice. You should always contact your deVere Acuma adviser for a personal consultation.

* No liability can be accepted for any actions taken or refrained from being taken, as a result of reading the above.